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    suzetterussell's Avatar
    suzetterussell Posts: 1, Reputation: 1
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    #1

    Aug 20, 2006, 01:08 PM
    Amortize prepaid insurance
    I have a question that I can't seem to answer. If I have a prepaid insurance on January 1st which benefits me a full calendar year . How do I amortize for 6months on June 30th and how would I list the journal entry .


    Any assitance would be more than appreciated
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Aug 20, 2006, 07:47 PM
    Ok, lets assume that the value you paid for this insurance is $1,200

    On Jan. 1, you would record:
    Dr. Prepaid Insurance 1,200
    Cr. Cash 1,200

    On June 30, you would record
    Dr. Insurance Expense 600
    Cr. Prepaid Insurance 600

    Why 600?

    Because as of June 30, you have used up 50% of your insurance (Jan 1 – June 30 = 6 months)
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